Ruhr Economic Papers

Ruhr Economic Papers #903

Corona and the Stability of Personal Traits and Preferences: Evidence from Germany

by Manuel Frondel, Daniel Osberghaus and Stephan Sommer

RUB, RWI, 04/2021, 25 S./p., 8 Euro, ISBN 978-3-96973-044-7 DOI: 10.4419/96973044

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Abstract

Based on panel data on around 5,500 German households, this paper analyzes whether the experience of financial losses due to the Corona pandemic has affected three kinds of personal traits and preferences: the willingness to take risks, patience, and the locus of control. Our empirical results indicate that patience and the locus of control remain unchanged by the experience of pandemic-related financial losses, whereas we find a significantly negative effect of severe financial losses on risk taking, contrasting with the traditional assumption that such preferences are constant. In this respect, our heterogeneity analysis indicates that financial losses due to Corona particularly affect the most vulnerable households, notably low-income households and those with little income diversification.

JEL-Classification: D91, C23

Keywords: Patience; risk aversion; locus of control

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